What's in a name who qualifies as a limited partner for self-employment tax purposes? Walter D. Schwidetzky
By: Schwidetzky, Walter D
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Material type: 
ArticleSubject(s): TRABAJADORES AUTONOMOS | IMPUESTOS | SOCIEDADES DE RESPONSABILIDAD LIMITADA | ESTADOS UNIDOS
In:
Journal of Taxation of Investments v. 41, n. 2, Winter 2024, p. 3-12Summary: There have been several cases that have looked at what it means to be a limited partner for Section 1402(a)(13) purposes. The definition is an important one as generally under the Code a limited partner’s share of income is excluded from net earnings from self-employment, which in turn means it is not subject to relevant Social Security and Medicare taxes. Recently, the Tax Court, in Soroban, concluded that it is not sufficient for Section 1402(a)(13) purposes to meet the definition of limited partner for state-law purposes. The taxpayer must be a limited partner in substance, essentially meaning the limited partner must be a passive investor.
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Resumen.
There have been several cases that have looked at what it means to be a limited partner for Section 1402(a)(13) purposes. The definition is an important one as generally under the Code a limited partner’s share of income is excluded from net earnings from self-employment, which in turn means it is not subject to relevant Social Security and Medicare taxes. Recently, the Tax Court, in Soroban, concluded that it is not sufficient for Section 1402(a)(13) purposes to meet the definition of limited partner for state-law purposes. The taxpayer must be a limited partner in substance, essentially meaning the limited partner must be a passive investor.
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